Keane and Keane and Ors (No 2)

[2013] FamCA 891

FAMILY COURT OF AUSTRALIA

KEANE & KEANE & ORS (NO 2) [2013] FamCA 891

FAMILY LAW – COSTS – where the mother is in a significantly stronger financial position than the father – where all other factors under s 117(2A) point to a costs order in the mother’s favour – whether the mother is entitled to an indemnity costs order

Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 118 ALR 248
Kohan & Kohan (1993) FLC 92-340
Munday v Bowman (1997) FLC 92-784

Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029

APPLICANT: Ms Keane

RESPONDENT: Mr Keane

4^th RESPONDENT: Mr R

FILE NUMBER: SYC 279 of 2011

DATE DELIVERED: 12 November 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 17 October 2013

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Litigant in person

SOLICITOR FOR THE RESPONDENT: Litigant in person

SOLICITOR FOR THE 4^TH RESPONDENT R Firm

Orders

1. The father pay to the mother on a party/party basis seventy-five percent (75 per cent) of the mother’s costs in relation to the proceedings to be as agreed or assessed.

2. Order 4 in the mother’s Amended Application in a Case filed 15 October 2013 be dismissed.

3. Within a further 28 days the fourth respondent file any reply to the father’s application filed 11 October 2013 and any affidavit in support of that reply.

4. This matter be listed for mention on 28 January 2014 at 2.45pm.

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 279 of 2011

Ms Keane

Applicant

And

Mr Keane

Respondent

And

Mr R

4^th Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. In these proceedings the father applied against the mother to set aside the binding child support agreement. The Child Support Registrar (“CSR”) became involved as a result of accruing arrears of child support (and in the process sought to be heard about whether or not the child support agreement would be set aside). The CSR sought orders against the father’s home. That application resulted in the joining of the father’s current wife, Ms Keane, to the proceedings as she and the father owned the property as joint tenants.

2. In her Amended Response filed 11 July 2012, the mother made an application in her own right for enforcement of arrears in relation to non-periodic payments.

3. On 10 May 2013, I made orders and delivered my Reasons for Judgment in the substantive matter. The effect of those orders was to:

   3.1dismiss the father’s application to set aside the binding child support agreement;

   3.2declare that as at 10 September 2012, the father owed to the Child Support Registrar the sum of $78,295.82 ($69,416.89 + $8,878.93) in relation to arrears of child support and late penalties, and that the G Town property be charged in favour of the Child Support Registrar in relation to that debt;

   3.3declare the father owed to the mother an amount of $18,964.41 in relation to arrears of non-periodic payments.

4. By way of an Amended Application in a Case filed 15 October 2013, Ms Keane (the applicant in these proceedings, and the first respondent in the substantive proceedings), seeks:

   4.1.That in relation to the child support proceedings concluded by way of orders dated 10 May 2013 and pursuant to s 117(2) of the Family Law Act (1975), the court order that the costs of the applicant, Ms Keane (the first respondent in the original proceedings) be paid by the first respondent Mr Keane (applicant in the original proceedings).

   4.2.That for the purposes of order 1 above, the costs of the application for the proceedings shall be declared to be an amount of [in accordance with an amendment made by the mother orally] a sum of $93,962. [The mother’s affidavit in support of this application made it clear that she sought this sum by way of an order for indemnity costs.]

   4.3.That in the alternative to order 2 above, the court order that the cost of the application be as agreed between the parties or as assessed.

   4.4.That in addition to order 2 (or 3) above, that any additional costs related to the applicant’s application for costs be paid by the first respondent, Mr Keane (the applicant in the original proceedings) on an indemnity basis.

5. The mother’s application was originally filed on 13 June 2013 (slightly more than 28 days after the delivery of the judgment on 10 May 2013). Rule 19.08(2)(b) Family Law Rules 2004 (Cth) requires an application for costs to be filed within 28 days after the final order is made. The mother made an application for leave to file out of time and the father did not oppose that application. An order for leave was made on 17 October 2013.

6. The father’s Response filed 11 October 2013 (before the amended application) upon which he continued to rely upon at the hearing was in the following terms:

   6.1.That the Forth Respondent pay the Applicant’s costs

   6.2.Alternatively, that the Applictaion in a Case filed 13 June 2013 be dismissed. [errors in original]

7. Mr Raupach, on behalf of Mr R who was the fourth respondent in the original proceedings, appeared and indicated that he had only been served with the father’s Response on 14 October 2013. He sought an adjournment.

8. On 17 October 2013, I made the following orders and notations:

   1.    I note that Mr Raupach appears for [Mr R] today. I note that the respondent father’s application filed 11 October 2013 was served on [Mr R] on 14 October 2013 and that [Mr R] seeks time to respond to the father’s claim. I intend to deal with the mother’s application against the father for costs. Depending on the result of that application, if it is successful in whole or in part, [Mr R] will have 28 days to file any reply and any affidavit in support of that reply. The matter will be relisted before me after that time.

   2.    Leave granted to the applicant to file an application for costs out of time. Leave granted to the mother to amend her Amended Application in a Case so that the figure $62,262 is amended to $93,962.

THE LAW TO BE APPLIED

1. Ordinarily each party bears their own costs (s 117(1) Family Law Act 1975 (Cth) (“FLA”)). However the court, if it considers it just, may make an order as to costs if the court is of the opinion that there are circumstances to justify doing so (s 117(2) FLA). In considering whether or not a costs order should be made, the court shall have regard to the matters set out in section 117(2A) FLA:

   (2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a) the financial circumstances of each of the parties to the proceedings;

   (b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g) such other matters as the court considers relevant.

The financial circumstances of each of the parties to the proceedings

1. There is no doubt at the current time the mother is in a stronger financial position than the father. She has worked for a considerable period of time in stable employment as an administration officer. She currently has a home in which she lives with the two children of the marriage which has an estimated value of $600,000. The current mortgage in respect of that property is $17,000. In addition, the mother has liquid funds of approximately $47,000.

2. The father has no assets apart from an interest in a superannuation fund of approximately $115,000. He remains unemployed. As a result of orders made in this matter on 10 May 2013, the equity that he had in his property at G Town was paid:

   11.1to the Child Support Agency in respect of arrears of child support ($78,295 with fines and penalties);

   11.2to the Child Support Agency in respect of their costs;

   11.3to the mother directly in the sum of $18,964 in relation to non-periodic child support arrears;

   11.4to his former solicitors for work done prior to 10 July 2012 which was secured by a charge on the G Town property.

   The mother received the bulk of the $78,295, although some was retained by the Child Support Agency in relation to fines and penalties. Upon the father’s application, that amount became available for payment of periodic child support to the mother. That credit was originally in the sum of $7,858. The mother will receive that at a rate of $550 per week until that amount is exhausted.

3. In my Reasons for Judgment dated 10 May 2013, I said:

   85.    The father conceded in cross examination that he had not personally made any job applications. He had registered with a number of agencies. In 2012 those agencies had on his behalf made job applications on five occasions. In 2011 five job applications in all were made on his behalf.

   86.    The father presented himself as having a very narrow band of specific skills which eliminated him from applying for any job that had been identified during the course of the hearing. The father was shown a variety of job advertisements during the hearing. In response to being shown each advertisement, the father’s oral evidence was that there was some element in the required job description that he was unable to fulfil as a result of his current skills.

   87.    The father has not made any serious attempt to retrain in the period. He said that he had used some of his time to attempt to increase his skills by using free resources available on the internet.

   88.    The father at the current time seems to have two free days a week as well as weekends available where he does not have significant duties in terms of parenting and/or the third respondent is available to look after the two children of their marriage. The father said that he went to the gym two to three days per week plus weekends. I took it from what he said that he was going to the gym five days a week. The father conceded that he was pretty fit.

   89.    I was reasonably underwhelmed with the father’s application to the task of attempting to obtain new employment. The father said that he had not thought about getting a job that was a lower paid job than the one that he had previously had. He mentioned that he had never applied for something like a help desk consultant role and agreed that a call centre was within his skill set. 

   90.    The father did not complete the high school certificate but finished high school and obtained a job in the work force immediately. The father has done on the job training and has managed to make himself valuable to an employer for all his working life up until 2009. I am unable to explain the father’s lack of motivation in his job searching in the last three years except to find that it has been a convenient arrangement between he and the third respondent knowing that an amount (and probably a significant amount) of what the father might earn would end up being paid by way of child support to the mother.

   …

   92.    I find that the father has decided not to work in paid employment at all; that that decision is not justified on the basis of his parenting responsibilities or his health and he has not demonstrated that avoiding his responsibilities under the child support agreement was not his major purpose.

   …

   102.  The father has not exercised his earning capacity since 2009. Had he done so, his financial circumstances would have been brighter.

4. The father during submissions indicated that he had put his name down to work at Bunnings but thought that they weren’t getting back to him because he was over qualified.

5. The father continues to live with his current wife who is the bread winner for their family. She received $119,924 on the settlement of the sale of the G Town property (which was slightly less than one half of the equity in the property). The mother did not make any application for costs against the father’s current wife (notwithstanding that she was a party to the proceedings and was unsuccessful in the proceedings).

Whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party

1. Neither party is in receipt of a grant of legal aid.

The conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters

1. Neither party sought to ask the other party any questions in relation to their affidavit evidence.

2. The mother points to the father’s conduct during the proceedings, particularly his conduct in relation to discovery of documents and financial disclosure.

3. Annexure W to the mother’s affidavit sworn 10 July 2012 is five letters from the mother’s solicitors to the father’s solicitors (R Firm). On 2 March 2012, the mother’s solicitors sought financial disclosure and disclosure in relation to the father’s termination from HBOS, his résumé, notices from the Child Support Agency and the father’s communication with Centrelink. On 28 March 2012, the mother’s solicitors note that “pursuant to the Orders of 7 March 2012 that [the father] was to provide disclosure documents…within 21 days, being by today”. On 25 June 2012, the mother’s solicitors note they “are yet to receive your client’s financial disclosure documents, notwithstanding previous Orders made by Her Honour Federal Magistrate Sexton… we have not received any Court documents or supporting disclosure material in accordance with the Orders made by His Honour Justice Watts on 1 June 2012.” A further letter was sent on 29 June 2012 seeking the urgent provision of financial documentation. On 10 July 2012, the mother’s solicitors noted financial disclosure had not been provided and asked the father bring financial documentation to Court for inspection.

4. In his affidavit sworn 11 October 2013, the father says he “provided instructions to [his] solicitor within an appropriate timeframe and produced documents to my Solicitor as and when requested.” He goes on to say “I say that the Fourth Respondent is liable for any failure to comply with pre-action procedures and disclosure requirements as I provided to him all documents as and when requested by him and provided instructions in an appropriate time frame.”

5. In this application brought by the mother, the father cannot rely upon any alleged shortcomings in the 4^th respondent. The mother is entitled to rely upon the evidence which indicates that the father was less than forthcoming in fulfilling his duty of financial disclosure.

Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. As indicated, the mother points to particular directions that were made by the court with which the father didn’t comply with. It is not asserted that the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court.

2. I do generally accept the mother’s proposition that to a large degree, the proceedings were necessitated by:

   22.1.The father’s misconception that he could set aside the child support agreement that he had entered into which had become binding upon him; and

   22.2.The father’s reorganisation of his working arrangements, particularly with his current wife so that he no longer exercised any discernible earning capacity.

3. One difficulty in making an assessment in this case is the fact that the Child Support Registrar became a party and took enforcement proceedings, which enforcement proceedings involved a consideration as to whether or not the father and his solicitor Mr R entered into arrangements which were in breach of an injunctive order made by a Scarlett FM (as his Honour then was) on 10 July 2012. This complicated the proceedings and given that the mother was a party to the proceedings, undoubtedly involved her in additional expense.

Whether any party to the proceedings has been wholly unsuccessful in the proceedings

1. The father has been wholly unsuccessful in the proceedings.

Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer

1. There were no written offers between the parties.

Such other matters as the court considers relevant

1. Verbal offers can be taken into account under s 117(2A)(g).

2. The mother says that the father attempted to settle the matter on 7 March 2012. He verbally offered to pay the mother $5,000 in final and final settlement of all past and future child support payments. His offer was on the basis the mother set aside the child support agreement and not seek any further child support.

3. The mother said that on 7 March 2012 in response she instructed her solicitors to make an oral offer to the father to settle the matter for a payment of $50,000. I do not have any evidence however that a verbal offer was communicated to the father. There is no evidence from the mother’s solicitors that her instructions were carried out. There is no evidence from the father’s solicitors about whether or not they received that offer or whether or not they passed it onto the father. The father’s evidence is that he never received any such offer. In those circumstances, I have no evidence before me that any offer was communicated to the father.

4. In relation to other matters that the court may consider relevant, even though the non-payment of child support may not have technically been a breach of an order, it is a matter that can be taken into account in circumstances where there was a finding that the father had failed to exercise an earning capacity.

5. I note also that the father entered into consent orders with the Child Support Agency to pay their costs of these proceedings in the sum of $10,000.

6. The father wishes to shift some of the responsibility onto his lawyer in the event that a costs order is made against him. He has also indicated that he might go into bankruptcy. If the father does not regain gainful employment in the medium to long term, then he will continue to have a child support liability under the binding child support agreement accumulate at a rate of $550 per week until each of the children are aged 18. That will accumulate a debt which would survive any bankruptcy.

CONCLUSION AS TO AN ORDER FOR COSTS

1. Many of the relevant considerations in s 117(2A) FLA (with the exception of the disparity in the financial positions of the parties) point in the direction of making a costs order in the mother’s favour.

2. The mother has the ongoing responsibility to maintain the two children of the marriage and I accept that not only will there not be any continuing payment of child support in the short to medium term, but also there will not be any other assistance given by the father to the mother in relation to the care of the children. The children are now, however, aged 17 and 15 years.

3. Despite the disparity in the respective financial positions of the parties, the mother is entitled to a substantial percentage of her costs, notwithstanding the fact that it is unlikely that she would be able to recover those costs against the father in the short term (that is of course unless the father gets some type of indemnity against Mr R).

1. I find it is just that the father pay to the mother 75 percent of the mother’s costs in relation to the proceedings.

THE MOTHER’S APPLICATION FOR INDEMNITY COSTS

1. The only issue remaining is whether or not the mother should get an indemnity costs order.

2. While the court clearly has a power to award indemnity costs, as opposed to costs on a party/party basis, it is an exceptional case in which indemnity costs are awarded (Kohan & Kohan (1993) FLC 92-340).

3. In Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 118 ALR 248, Sheppard J referred to the courts’ “settled practice” that where the court orders one party to pay another party’s costs, the order is for costs to be paid on a party/party basis. His Honour went on to say “there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice.”[1]

   [1] As enunciated by Brandon LJ (as he was) in Preston v Preston [1982] 1 All ER at 58.

4. In Munday v Bowman (1997) FLC 92-784, Holden CJ highlighted at 84,660 the following examples of circumstances where indemnity costs may be awarded (footnotes omitted):

   (a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts.

   (b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.

   (c) Evidence of particular misconduct causing loss of time to the court and to other parties.

   (d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.

   (e) An imprudent refusal of an offer to compromise.

5. This list is not exhaustive, and it is clear that each case shall be assessed on its individual merits (Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029).

6. In my view the precondition for an indemnity costs order does not exist in this case. There was an arguable uncertainty about whether or not the child support agreement was binding. Costs are to be payable on a party/party basis as agreed or assessed.

7. Order 4 of the mother’s Amended Application sought indemnity costs in relation to this costs application. The mother was self represented in the costs proceedings. I do not make any costs order in favour of the mother arising from this application. I dismiss order 4 of her Amended Application.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 12 November 2013.

Associate: 

Date:  12.11.2013